7. Categorization and Need for Hearing
In the Order instituting this investigation, the Commission determined preliminarily that this was an adjudicatory proceeding and that an evidentiary hearing would be necessary. In their responses to the order, no party objected to these determinations and we affirm them at this time.
John A. Bohn is the assigned Commissioner and Michael J. Galvin is the assigned ALJ in this proceeding.
1. Yermo Water Co. is a regulated water utility serving approximately 350 metered customers approximately ten miles north of Barstow in San Bernardino County.
2. The Commission found in Yermo's 1993 general rate proceeding that Yermo's water system was antiquated with most if its pipes over 50 years old and in constant need of repair, which resulted in numerous customer complaints.
3. The Respondents to this investigation are Yermo Water Company and Walker, the sole owner of Yermo.
4. Respondents did not provide any direct testimony at the evidentiary hearing.
5. Resolution W-3812 required Yermo to maintain a customer complaint log and comply with G.O. 103 with respect to customer complaints.
6. Resolution W-3812 required Yermo to file a plan of action no later than the end of February 1994 detailing repair work and system upgrading and to provide scheduled updates on the plan of action.
7. Respondent Walker, not sure if the required plan of action was filed with the Commission, does know that scheduled updates were not filed.
8. The only reportable improvement made to the water system from January 2003 to December 2007 was $2,000 for Other Equipment.
9. Pub. Util. Code § 791 requires Yermo to have an office in a county of this State in which its property is located and shall keep in that office all the books, accounts, papers, and records required by the Commission to be kept within this State.
10. Respondent Walker moved out-of-state to Florida in 2002 and continued to manage the water company from Florida without Commission authorization.
11. Respondents closed the Yermo water business office in 2006 and relocated the office and all financial records to Florida.
12. The billing functions continue to be handled out of Florida.
13. Respondents currently have a part-time State certified operator for the water system.
14. Respondent Walker reported in Yermo's filed 2003 Annual Report that he was the president of Yermo, a California corporation.
15. Respondent Walker reported in Yermo's filed 2005 Annual Report that he was the owner of Yermo, an unincorporated entity.
16. Respondent Walker reported in Yermo's filed 2006 Annual Report that Yermo is a Florida corporation.
17. Pub. Util. Code § 818 prohibits a public utility from issuing stock without having first secured from this Commission an order authorizing the issuance of stock.
18. Pub. Util. Code § 825 provides for the issuance of stock without an order of authorization from the Commission to be void.
19. Pub. Util. Code § 851 precludes the sale of a water system without prior Commission authority.
20. G.O. 103 sets forth the minimum standards and rules for water service.
21. G.O. 103requires a water utility to comply with the laws and regulations of the state or local department of Public Health.
22. CDPH required Respondents to issue a Boil Water Advisory Notice from July 3, 2006 to August 10, 2006 and again from July 19, 2007 to August 14, 2007.
23. The CDPH issued Respondents a citation on January 8, 2009 for failure to resolve prior CDPH citations and payment of a $2,500 civil penalty. That civil penalty has increased to $43,800.
24. Respondents' Tariff Schedule No. UF 104-W, dated April 29, 1998 requires customers to be billed a 1.4% user fee surcharge.
25. The user fee surcharge was increased to 1.5% from 1.4% effective July 1, 2007.
26. Respondents did not bill customers a user fee surcharge.
27. Respondents have not updated tariffs to reflect the current user fee surcharge.
28. Special Condition 1 of Yermo's Tariff Schedule No. 1 for metered services provides for a purchased power balancing account and requires a $0.38 per hundred cubic feet purchased power surcharge to be added to the quantity rate of each customer's water usage.
29. Yermo does not maintain a purchased power balancing account.
30. Respondents have been trying to sell Yermo for the past ten years.
31. Ordering Paragraph 6 of the order initiating this investigation required Respondents to submit to the Director of the Water Division a copy of their 2002 through 2007 customer complaint logs no later than May 23, 2008.
32. Respondents complied with Ordering Paragraph 6 of the order initiating this investigation in August of 2008, three months late.
Conclusions of Law
1. Respondents have consistently violated and remain in violation of Commission and CDPH orders.
2. Yermo is unable or unwilling to adequately serve its ratepayers.
3. Yermo's inability to adequately serve its ratepayers has a potential adverse effect on public health.
4. Clear title of Yermo and its public utility water properties, including well sites, needs to be established because of Respondents' recent unauthorized changes in the legal ownership of Yermo.
5. Pub. Util. Code § 855 provides that the Commission may petition the Superior Court for appointment of a receiver to operate a water system when the Commission determines, after notice and hearing, that the water system company is unable or unwilling to adequately serve its ratepayers, or has been actually or effectively abandoned by its owners, or is unresponsive to the rules or orders of the Commission.
6. The Commission's Legal Division should be directed to file immediately with the Superior Court of San Bernardino County a petition for appointment of a receiver to take possession of and operate the water system of Yermo.
7. The Commission's Division of Water and Audits should audit Yermo's 2003 through 2008 user fee calculations and payments.
8. The Division of Water and Audits should audit Yermo's purchased power surcharge billing practices.
IT IS ORDERED that:
1. The Commission's Legal Division shall file immediately with the Superior Court of San Bernardino County a petition for appointment of a receiver to assume possession of and operate the water system of the Yermo Water Company.
2. The 2006 incorporation of Yermo Water Company as a Florida corporation is voided pursuant to Pub. Util. Code §§ 818, 825, and 851.
3. The Commission's Division of Water and Audits shall audit Yermo Water Company's 2003 through 2008 user fee calculations and payments within 30 days after the effective date of this decision.
4. The Division of Water and Audits shall audit Yermo Water Company's billing procedures to determine whether the purchased power surcharge has been billed and, if so, offset that revenue against Yermo's purchased power costs and require Yermo to record on its accounting records any balance in a purchased power balancing account within 30 days after the effective date of this decision.
5. Yermo Water Company shall reimburse the Commission for the reasonable costs incurred in having Division of Water and Audits staff travel to its out-of-state office, in the event that Yermo does not produce the records and information needed by the Division of Water and Audits to undertake its audit of user fees and purchase power surcharge for inspection in California.
6. Investigation 08-04-032 is closed.
Dated May 7, 2009, at San Francisco, California.
